Canara Bank has made a slight change to its lending rates. The bank informed the stock exchange that its Marginal Cost of Funds Based Lending Rate (MCLR) has been revised. The new rates will come into effect from 12 February 2026.
MCLR is the minimum interest rate below which a bank cannot lend. It was introduced by the Reserve Bank of India to ensure that changes in interest rates are transmitted to customers quickly and transparently. Canara Bank has reduced MCLR only for short tenures, while keeping long-term rates unchanged.
Revised MCLR Rates
- Overnight MCLR has been reduced from 7.90% to 7.85% — a cut of 5 basis points.
- One-month MCLR has also been reduced from 7.95% to 7.90% — again a 5 basis points cut.
- Three-month MCLR remains unchanged at 8.15%.
- Six-month MCLR stays at 8.50%.
- One-year MCLR continues at 8.70%.
- Two-year MCLR remains 8.85%.
- Three-year MCLR is unchanged at 8.90%.
Interest Burden to Ease Slightly
This revision is important because many loans—such as home loans, car loans, and personal loans—are linked to MCLR. Customers whose loans are reviewed on a short-term basis, or those taking new loans, may see a marginal benefit.
With overnight and one-month rates reduced, the borrowing cost will decrease slightly. Although the reduction is small—just 5 basis points (0.05%)—it is still positive news for borrowers.
Benefit for Borrowers
The move comes amid rising credit demand from both retail and wholesale segments. The central bank has also been encouraging faster transmission of rate changes. By cutting short-term MCLR, the bank is supporting this objective.
Canara Bank officially communicated this update to the stock exchange to keep investors and customers informed. If you already have a loan with the bank—or are planning to take one—this change could benefit you, especially if your loan is linked to short-tenure MCLR.
Long-term rates remain unchanged, likely because the bank’s cost of funds and other factors have not seen significant shifts. Customers are advised to check their loan documents to see which MCLR tenure their loan is linked to. If it is tied to a short-term benchmark, the benefit will be reflected sooner.